The Central America Free Trade Agreement (CAFTA) will lead to increased ethanol exports largely from Brazil entering into the U.S. tariff-free, according to a new report released today by the Institute for Agriculture and Trade Policy (IATP).
The report found that agribusiness firms are already investing heavily in Brazil and the Central American region in an effort to take advantage of the CAFTA ethanol provisions. Under CAFTA, if Central American countries convert Brazilian ethanol into fuel for the U.S., 240 million gallons of ethanol could be exported into the U.S. tariff-free in 2005. That number is just the tip of the iceberg. If ethanol feedstock produced in Central America is part of a 50 percent blend with Brazilian ethanol, unlimited amounts could be exported into the U.S. tariff-free.
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